Finally, it is the last weekend here. All of us are in a joyous mood. After yesterday's party, absenteeism was expected to be high - which was not the case. Groggy faces, sore throats, but all were present - shows the commitment of AMP179 to themselves, I suppose !
Today, we had a guest - Ingrid Johnson from Nedbank - who was in the AMP program in 2005. It was her personal case, which we discussed today.
Most leaders have blind spots - but once they know about it, they will quickly go about fixing it. There are enormous challenges in leading a change in large organizations. It requires courage of conviction, patience, perseverance, ability to get buy-in and pull up people as needed. There was an interesting quote made in class today, by Dominic Coles of BBC. He quoted, "Scratch a pessimist and you find often a defender of privilege". This quote is attributed to William Beviridge, the famous British Economist and Social reformer. Most pessimists and people who resist change are defending their own roles, power and fiefdom.
Ingrid made some interesting comments in the class today:
- Organizations don't change, people do
- Capabilities of your team should be more than the size of your dreams
- Inspect what you expect
There was a view that there are four kinds of people in every organization, when it comes to implementing a new change : Fast, Slow, Can't , Won't. You need to use different methods to deal with each of them.
The second case was on the role of investors in Operations. We discussed this in class in the context of the Airbus A380 delays. When the first delay was announced in June 2005, the market held its value and subsequently it even recovers. When the second delay was announced in 2006, it had a devastating impact on its market cap - and it lost over Euro 5 billion in the next few days. Why do investors react like this ?
In this case, the management credibility was severely damaged. After the assurances that the wiring issues were fixed, the second delay was related to the same - this did not give confidence that the management was in control of operations. And to top it all, the CEO had a disastrous call with analysts , where he put the blame on his people. There were rumours that he had sold his stock before the analyst call and hence he was very careful in what he was saying, to avoid getting sued.
A lot of research has been done on the impact of press releases announcing some form of disruption and its impact on stock prices. Two factors were considered:
- Is the information not credible : true when the press release is not made in conjunction with audited financial results; in these cases the market drops by 2.8%
- Is the management to blame: was the source of disruption internal and not external environment; in these cases the market drops by 6.32%
- In case both are true, the market drops by 7.09%
The gap between market price and the intrinsic value could be a combination of three things: communication gap, lack of a proven track record, strategy gap.
 |
| From left: Akshay, Partha - on Mass Avenue, Boston |
Yes the weekend is finally here. Today, I went over to the MIT campus to have lunch with a student there - Akshay Ashok. Went to an Indian restaurant and chatted for a while, before walking back to HBS. On the way back, spent some time watching the Head of The Charles Regatta - the world's largest two day rowing event on the river Charles. This is the 46th year in which it is being held with over 55 different race categories. Over 200,000 spectators were expected over the weekend. It was quite crowded - the weather being good added to the joy. Here are some pictures.
Saturday night was a nice evening out for some of us in the living group. We had a nice drink and chatted about many things - life beyond HBS. After that Kevin had booked a table for us at the Russel House, a fine place for dinner. Enjoyed the evening, very much - thanks to Kevin.
Sunday was a quiet day - for the first time, I had Sunday lunch at the Sprangler hall. Spent time putting all the cases in the respective folders and packed them to shipped off to India on Tuesday.
No comments:
Post a Comment